NSW government hoping for $1 billion dollar windfall from foreign investors
Stamp duty and land tax hikes for foreign investors in NSW.
In an attempt to raise $1 billion over the next four years the NSW government is introducing foreign investor surcharges on residential real estate purchases.
As part of the upcoming state budget, NSW Treasurer Gladys Berejiklian said there would be a 4% stamp duty and 0.75% land tax applied to property bought and owned by foreign investors.
The stamp duty surcharge will apply from the 21 June budget date, while the land tax will come into play 1 January 2017.
Berejiklian says the taxes are expected to raise more than $1 billion by 2020.
"These new measures will ensure NSW's property market continues to be an attractive destination for international investors while making sure that we are able to fund vital services into the future," she says.
On top of the surcharges, foreign investors will no longer be eligible to receive a 12-month deferral for the payment of stamp duty on off-the-plan residential real estate purchases. They'll also be exempt from a tax-free threshold on the land tax surcharge.
In Australia, around 20% of all residential real estate is sold to foreign investors.
NSW isn't the only state to target overseas property buyers. From July, the Victorian government will impose a 7% foreign investor surcharge on residential stamp duty and a 1.5% surcharge on some land tax.
Queensland is following suit, with foreign investors facing a 3% stamp duty surcharge on residential purchases.
However, critics believe the proposals to curb foreign investment in NSW could actually drive up property prices.
Urban Taskforce chief executive Chris Johnson says foreign investors drive development by underpinning pre-sales, helping local purchasers buy into viable projects.
Earlier this year, the Foreign Investment Review Board revealed that spending on Australian residential and commercial real estate nearly doubled in the 12 months to 30 June 2015.
Extra revenues to be raised by new foreign investor surcharges in NSW:
|Stamp Duty||$226 m||$216 m||$192 m||$201 m||$835 m|
|Land Tax||$36 m||$40 m||$43 m||$47 m||$166 m|
|Total||$262 m||$256 m||$235 m||$248 m||$1.001 b|